The Effect of Career Compensation and Development to

Employee Satisfaction of Public Works Office in Aceh

with Organizational Commitment as a Mediation

Variable

Em Yusuf Iis

, Sulaiman

, Muhammad Roni

, A. Hadi Arifin

, and Marbawi Adamy

Faculty of Economics and Business, Universitas Malikussaleh, Aceh, Indonesia

Business Administration Study Program, Social and Political Sciences Faculty,

Universitas Al-Muslim, Aceh, Indonesia

ahadiarifin88@gmail.com,marbawi@unimal.ac.id

Abstract. This study aims to analyze the effect of compensation and career

development on organizational commitment and employee job satisfaction, to

know the effect of organizational commitment on employee job satisfaction, and

to examine the mediation effect of organizational commitment between

compensation and career development on employee job satisfaction at the Aceh

Government Public Works Service. The samples of this study are 133

respondents taken using the Census sampling technique. The analytical tool used

is path analysis with SEM (structural equation modeling) using Amos. The

results show that compensation and career development have a positive and

significant effect on job satisfaction, while organizational commitment

influences job satisfaction. Based on the mediation analysis, organizational

commitment partially mediates the effect of compensation on job satisfaction,

and organizational commitment mediates in full mediation the effect of career

development on job satisfaction.

Keywords: Compensation · Career Development · Organizational Commitment ·

Job Satisfaction

1 Introduction

Job satisfaction is felt by employees because of the underlying things. A person will

feel comfortable, and the level of loyalty at his job will be high if the person gets job

satisfaction at work (Nasution et al. 2018). Job satisfaction is a reflection of workers'

feelings towards their work. Luthans (2011) states that job satisfaction is the fulfillment

of all the needs of workers in carrying out their duties at a certain time. Job satisfaction

has a dynamic nature, which means that satisfaction is not a permanent condition

because it can be influenced and changed by forces both inside and outside the work

environment. Job satisfaction can decrease as fast as job satisfaction arises, so this

requires leaders to pay more attention. Unanue et al., (2017) Employees will be able

and want to work well and have high job satisfaction if they are placed in a position

under their interests and abilities and can meet various needs by doing work. Employees

must be placed in positions by their interests and abilities by considering efforts to meet

Iis, E., Sulaiman, ., Roni, M., Ariﬁn, A. and Adamy, M.

The Effect of Career Compensation and Development to Employee Satisfaction of Public Works Ofﬁce in Aceh with Organizational Commitment as a Mediation Variable.

DOI: 10.5220/0009574400002900

In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 21-32

ISBN: 978-989-758-582-1; ISSN: 2655-9064

the needs of human resources.

Organizational commitment is a strong desire to remain as a member of a particular

organization, a desire to strive based on the wishes of the organization, and confidence

in accepting the values and goals of the organization, Karim & Sciences,(2012).

Commitment is a person's ability to carry out obligations and responsibilities. An

organization member must commit himself. (Armstrong, 2009) The response system

provided by the organization sometimes receives less attention from employees to

foster a more loyal attitude towards the organization. This causes the employees to

worry about sanctions if they submit their complaints. The concept of commitment in

the workplace or organization becomes an interesting research topic Setyowati, (2017).

Ghosh & Swamy, (2014) and challenges that can be investigated in the area of

management and organizational behavior Robert L. Mathis, (2008) Steyrer,

Schiffinger, & Lang, (2008). Dixit & Bhati, (2012). If an employee already has a high

level of commitment to the organization where he works, good work motivation will

appear in him. People who are already happy and suitable for the workplace will surely

dismiss any negative assumptions about the organization, and he will always defend

the organization. Employees will work better and continue to try to improve all their

abilities for excellent job satisfaction.

Hong, et al (2012) claims that compensation is remuneration given by the company

to the employees financially and non-financially. Nowadays, the most important

problem with compensation is the compensation received by employees of the Public

Work Office of Aceh Government is not optimal compared to the workload carried out

by each employee. In the new organizational structures and work procedures,

employees are required to work more professionally, disciplined, and able to complete

existing work programs appropriately and with good work results, but the compensation

received by employees is not optimal.

Providing compensation is very important for organizational and employees

commitment so that organizational commitment gets employees who are willing to

work by carrying out their duties properly, and employees feel that compensation is

given as an appreciation for the work done. Bao, & Wu, (2017). Ivancevich et al, (2012)

Compensation is a function of human resource management related to all forms of

awards promised to be received by employees in return for carrying out tasks to achieve

organizational goals. This relationship will determine the survival and success of the

organization. Ulrich (2012) Career development has the role of Administrative,

Strategic Champion, Change Agent, and Champion employee. Employee Champion

explains the responsibilities of HR, Line Managers and employees themselves in terms

of increasing competence and employee involvement, while career development is a

personal improvement by someone to achieve a career plan and improvement by the

personnel department to achieve a work plan based on the path or level of the

organization, (Andana et al. 2012).

The phenomenon related to employee job satisfaction at the Public Works Service

show that many employees still do not want to be involved in work that involves

directly with the leaders because many employees feel that the leaders are very difficult

to accept ideas, so employees are more passive, and only accept ideas of leaders.

Besides, regarding promotion opportunities, it still does not look optimal because most

employees who are promoted are those closest to their superiors.

Another phenomenon related to organizational commitment is reluctance and lack

of willingness to help colleagues complete organizational tasks

. Besides, it is difficult

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

to unite perceptions and unite activities and priorities owned to achieve greater

organizational goals, even more so if the project being processed is a project that is

controlled by people closest to the boss. Also, there is a lack of employees in

understanding the needs of the organization to achieve greater organizational goals so

that more priority work is short-term needs.

The phenomenon of employee career development at the Aceh Government Public

Works Service reflects that the low level of employee education activities to continue

education, especially regarding study permits that require approval from superiors.

Besides, the lack of training provided that many jobs require the involvement of outside

experts such as consultants because employees are still not skilled in handling certain

projects. Another most difficult problem is regarding mutations or job placements that

are inappropriate with the expertise of employees that causes job dissatisfaction.

Besides, the phenomenon of compensation is also a problem for employees at the

Public Works Service of Aceh Government where the determination of individual

employee payments is considered unfair or uneven. The income of passive employees

is better because they are closer to superiors while employees who have no influence

only get their rights which are considered insufficient. Another problem also arises

when the method of payment of income is more to the percentage of position and not

on the performance and professionalism that causes many employees to complain about

the injustice of compensation distribution. For this reason, the researchers are

interested in conducting in-depth research with the title "The Effect of Compensation

and Career Development on Employee Job Satisfaction at the Public Works Service of

Aceh Government with Organizational Commitment as the Mediation Variable".

2 Literature Review

2.1 Job Satisfaction

Job satisfaction is the fulfillment of all the needs of workers in carrying out their duties

at a certain time, (Usman, 2011). Job satisfaction theory is part of motivation theory

and tries to answer the question of what needs are satisfying and encourages the spirit

of work for the needs and satisfaction of non-material and material obtained from the

work. If needs and satisfaction are increasingly met, the spirit of work will get better.

Herzberg (1959), Job satisfaction is a reflection of the feeling of work towards the work

of an employee. The impact on the positive attitude of employees towards his work is

related to the output produced. So, the job satisfaction of employees depends on

expectations, which are obtained through work. If there is no difference between what

is desired has been fulfilled, it will be satisfying. The job satisfaction has a general

dimension to the job itself, through salary, promotion opportunities, supervision,

coworkers Luthans, (2012). Job satisfaction refers to several indicators of Ward and

Sloane (1999) in Koesmono (2005), namely the existence of colleague relationships,

relations with leaders, promotion opportunities, salary, and work comfort.

The Effect of Career Compensation and Development to Employee Satisfaction of Public Works Ofﬁce in Aceh with Organizational

Commitment as a Mediation Variable

2.2 Organizational Commitment

Commitment is a psychological condition that characterizes the relationship between

employees and the organization and has implications for the individual's decision to

stay or leave the organization. Tobing, Armstrong (2009), commitment represents the

level or strength of the individual and is collected in an organization. Luthans (2011),

organizational commitment is a reflection of employee loyalty and the conservation

process in which members of the organization agree to pay attention to the organization

and trust to accept the values and goals of the organization. Robert Kreitner (2011),

organizational commitment is a reflection of where the employees in the organization

and help to achieve goals. This is an important work decision because people have

commitments that are expected to be able to predict better work outcomes to achieve

organizational goals and have a greater desire to work in an organization.

Organizational commitment refers to several indicators of Spencer and Spencer (1993)

in Kaswan (2015) namely that there is a willingness to help colleagues complete

organizational tasks, uniting their activities and priorities to achieve the goals of a larger

organization, understanding the organization's needs to achieve greater organizational

goals and choose appropriate organizational needs rather than following some

professional interests.

2.2.1 Career Development

Career development is a personal improvement done by someone to achieve a career

plan and improvement by the personnel department to achieve a work plan based on

the path or level of the organization (Andana et al. 2012). Judging from HR Champion

Ulrich (2012), there are roles of Administrative, Strategic Champion, Change Agent,

and employee Champion. Employee Champion explains the responsibilities of HR,

Line Managers and employees themselves in terms of increasing competence and

employee involvement. The role of building a career path by building employee

champions, and is the responsibility of human resources, superiors, and employees

themselves must be responsible for the aspirations and interests in career. Hartigh et al,

(2018), career development refers to several indicators according to Donnelly, et al

(2012) consist of education, training, mutation, and promotion of position and tenure.

2.2.2 Compensation

Compensation is a remuneration provided by the company to employees, both financial

and non-financial, Robbins, (2013), employee compensation is all forms of payment as

gifts given to employees from their work. Compensation is all income consisting of

money or goods, directly or indirectly received by employees as the rewards for

services given to the organization. Raithatha et al, (2016), compensation of employees

in the form of balance given to employees in return for their work. Ivancevich et al,

(2012), Compensation is a function of the rewards promised to be received by

employees as a reward for carrying out tasks to achieve organizational goals.

Compensation refers to several indicators. According to Huffman, et al, (2015),

Mangkunegara (2010), the indicators of compensation consist of the High level of

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

Compensation

Career

Development

Organizational

Commitments

Job

Satisfaction

payment given, Payment Structure, Determination of Individual Payments, Payment

Methods, and Payment Control.

2.2.3 Conceptual Framework

The conceptual framework in this study was built on the theoretical view of experts,

and empirical research results on the relationship between compensation and

organizational commitment, the relationship between career development and

organizational commitment, and the relationship between organizational commitment

and job satisfaction.

For the progress of an organization, it does not only lie on high organizational

commitment and optimal employee performance but also job satisfaction as a driving

force to achieve organizational goals in doing work to be productive. According to

Markoulli et al., (2017). Unanue et al, (2017), job satisfaction is one of the

psychological aspects that reflects a person's feelings towards their work.

Previous research on compensation and its effects on organizational commitment as

conducted by Arta and Huczynski & Buchanan (2008), compensation has a positive

effect on organizational commitment. Then, the relationship between career

development and organizational commitment as stated by Robert L. Mathis, (2008),

there is an influence of career development on organizational commitment positively

and significantly.

Another research by Robbins, (2013) about the effect of compensation on job

satisfaction indicate that there is a positive and significant effect between compensation

and employee job satisfaction. Then, research on the relationship between career

development and job satisfaction stated by Vogel, (2016) shows that career

development has a significant effect on employee job satisfaction. Furthermore,

previous research examining organizational commitment and its effect on job

satisfaction conducted by David P. MacKinnon, (2012) show that organizational

commitment has a positive and significant effect on employee job satisfaction.

Based on the description above, the conceptual framework in this study is illustrated

in Figure 3.1 below:

H1 H3

Fig. 1. Conceptual Framework.

The Effect of Career Compensation and Development to Employee Satisfaction of Public Works Ofﬁce in Aceh with Organizational

Commitment as a Mediation Variable

2.3 Hypotheses

There are 7 (seven) hypothetical statements based on the research framework as

appeared below:

H1: Compensation has a significant effect on Organization Commitment of

Employee at the Public Works Office of Aceh Government.

H2: Career development has a significant effect on work commitment at the Public

Works Office of Aceh Government.

H3: Compensation has a positive and significant effect on job satisfaction of

employees at the Public Works Office of Aceh Government.

H4: Career development has a positive and significant impact on job satisfaction of

employees at the Public Works Office of Aceh Government.

H5: Organizational commitment has a positive and significant effect on Job

Satisfaction of employees at the Public Works Office of Aceh Government..

H6: Organizational commitment provides a mediating effect on the relationship

between compensation and job satisfaction of employees at the Public Works

Office of Aceh Government.

H7: Organizational Commitment mediates the Job Satisfaction of employees at the

Public Works Office of Aceh Government.

2.4 Research Methodology

This study uses a statement using a questionnaire as a tool to retrieve data using a

modified Linkert scale 1-5. The population in this study are 133 employees of the Public

Works Office of Aceh Government selected using a Census sampling. Baron & Kenny,

(1986) The analysis technique used is the Structural Equation Model (SEM) using SPSS

16.0 and Amos. The validity test of the instrument is conducted using the Confirmatory

Factor Analysis (CFA) of each construct by looking at the Loading Factor value of each

indicator and the results of each statement that has a value of > 0.6. The reliability test

uses the following formula:

Construct Reliability =



∑

.







∑

.







∑



While the variant extract can be calculated with the following formula:

Variance Extracted =

∑

.



∑

.

∑





2.5 Results and Discussions

The results of the full model 1 analysis (initial model) using SEM analysis are shown

in figure 2.

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

Fig. 2. CFA Full Model Constructs before Modification.

Furthermore, the suitability test of the model is in the following Table 1:

Table 1. Structural Equation Model Full Model Conformity Index Test before Modification.

Goodness o

Fit Index Cut-o

Value Anal

sis Results Evaluation Models

Chi-S

uare Statistics Ex

ected to be low 165,954

Goo

Probabilit

>0,05

0.016

Mar

inal

CMIN/DF <2.00 129

Goo

GFI >0.90

0.881

Marginal

AGFI >0.90

0.842

Mar

inal

TLI >0.95

0.958 Goo

CFI >0.95

0.965

Bai

RMSEA <0.08

0,047

Bai

Based on table 1 above, in general, all the constructs used in forming this research

model, both in the confirmatory analysis (CFA), the value of the regression between

constructs and the goodness of fit test consisting of CDMIN/DF already meet the

required criteria except Probability, GFI, and AGFI have values that are not good and

needs modification.

Fig. 3. CFA Full Model Constructs before Modification.

The Effect of Career Compensation and Development to Employee Satisfaction of Public Works Ofﬁce in Aceh with Organizational

Commitment as a Mediation Variable

CE JS

A=0,382

P=0,001

B=0,350

P=0,001

C=0,400

P=0,001

C’=0,134

P= 0,011

Furthermore, the suitability test of the model is in the Table 2 below:

Table 2. Structural Equation Model Full Model Conformity Index Test After Modification.

Goodness o

Fit Index Cut-o

Value Anal

sis Results Evaluation Models

Chi-S

uare Statistics Ex

ected to be low 165,954

Goo

Probabilit

>0,05

0.016

Mar

inal

CMIN/DF <2.00 129 Goo

GFI >0.90

0.881

Mar

inal

AGFI >0.90

0.842

Mar

inal

TLI >0.95

0.958 Goo

CFI >0.95

0.965 Goo

RMSEA <0.08

0,047 Goo

Figure 3 and table 2 above show the final results of the full model confirmatory

factor analysis. In general, all the constructs used in forming this research model, both

in the confirmatory analysis (CFA), the value of the regression between constructs and

the goodness of fit test consisting of CDMIN / DF, probability, TLI, CFI GFI and

RMSEA, have met the required criteria except AGFI which is at almost good value,

and the model can be concluded to be fit and support the data, but there is a marginal

value of AGFI but it is acceptable because the probability value is above 0.05. So, the

model is acceptable and feasible to be used in this study. To see how much direct,

indirect, and total influence is shown in Table 3:

Table 3. Tests of direct, indirect, and total influence.

Carreer

Development

Compensation of

Employees

Organizational

Commitment

Job Satisfaction

Direct Effects

Organizational

Commitment 0,186 0,382 0 0

Job Satisfaction 0,213 0,400 0,350 0

Indirect Effects

Organizational

Commitment 0 0 0 0

Job Satisfaction 0,065 0,134 0 0

Total Effects

Organizational

Commitment 0,186 0,382 0 0

Job Satisfaction 0,278 0,534 0,350 0

The results of testing the effect of mediating (intervening) on the relationship

between the compensation and job satisfaction mediated by the organizational

commitment are in Figure 4:

Fig. 4.

Figure 4 explains that the coefficients of path A, path B, and path C are significant,

and the significance value of path C is not significant. Because the probability of path

C 'is significant, a partial mediation relationship can be concluded. In other words,

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

CD JS

A=0,186

P=0,042

B=0,350

P=0,001

C=0,213

P=0,001

C’=0,065

P= 0,101

organizational commitment mediates in full mediation between compensation and job

satisfaction at the Public Works Office of Government of Aceh.

The results of testing the mediation effect of organizational commitment between

career development and job satisfaction shown in the form of Figure 5:

Fig. 5.

Figure 5 explains that the path coefficients of path A, path B, and path C are

significant, and the significance value of path C 'is not significant. Since the probability

of path C 'is insignificant, it concludes that there is a full mediation relationship or

organizational commitment fully mediates between career development and employee

job satisfaction at the Public Works Office of Aceh Government.

Table 4. Hypothesis Test Results.

No Hypothesis Statements

Estimate

Std.

S.E. CR P Conclusion

1 Compensation has a positive and significant effect

on the organizational commitment of employees at

the Public Works Office of Aceh Government.

0,408 0,110 3,714 0,001

The hypothesis is

accepted and the data

supports the model

2 Career development has a positive and significant

effect on the organizational commitment of

employees at the Public Works Office of Aceh

Government.

0,208 0,102 2,029 0,042

The hypothesis is

accepted and the data

supports the model

3 Compensation has a positive and significant effect

on job satisfaction of employees at the Public

Works Office of Aceh Government.

0,391 0,100 3,92 0,001

The hypothesis is

accepted and the data

supports the model

4 Career development has a positive and significant

effect on job satisfaction at the Public Works Office

of Aceh Government.

0,218 0,085 2,557 0,011

The hypothesis is

accepted and the data

supports the model

5 Career development has a positive and significant

effect on job satisfaction of employees at the Public

Works Office of Aceh Government.

0,320 0,094 3,415 0,001

The hypothesis is

accepted and the data

supports the model

6 Organizational commitment partially mediates

between compensation and job satisfaction in the

Public Works Office of Aceh Government.

0,134 0,052 2,539 0,011

The hypothesis is

accepted and the data

supports the model

7 Organizational commitment fully mediates between

career development and job satisfaction at the

Public Works Office of Aceh Government.

0,065 0,039 1,637 0,101

The hypothesis is

accepted and the data

supports the model

2.5.1 Research Implications

The research carried out must be able to contribute or theoretically implicate to the

development of science and make practical contributions to managerial policy. This

research has contributed theoretically and practically.

The Effect of Career Compensation and Development to Employee Satisfaction of Public Works Ofﬁce in Aceh with Organizational

Commitment as a Mediation Variable

2.5.2 Theoretical Implications

This research has several theoretical implications, as follows:

1. Compensation and career development have a positive and significant effect on

organizational commitment and job satisfaction. This is in line with most previous

research findings that found a positive and significant effect on compensation and

career development on organizational commitment and job satisfaction. Thus, this

research has strengthened the theoretical framework related to the effect of

compensation and career development on organizational commitment and job

satisfaction.

2. Organizational commitment has a positive and significant effect on job satisfaction,

and this is in line with most previous research findings that found a positive and

significant effect on organizational commitment to job satisfaction.

3. Organizational commitment partial mediates the relationship between

compensation and job satisfaction. This is not in line with the results of previous

studies, which indicate that there is a significant partial mediation effect of job

satisfaction that mediates the relationship between compensation and job

satisfaction..

4. Organizational commitment fully mediates the relationship between career

development and job satisfaction. This is not in line with the results of previous

studies, which finds that there is a significant partial mediation effect of job

satisfaction that mediates the relationship between compensation and job

satisfaction

2.6 Practical Implications

1. Compensation and career development have a positive and significant effect on

organizational commitment. This means that the better the compensation and career

development, the more the organizational commitment increases. The consequences

of compensation and career development certainly increase organizational

commitment.

2. Compensation and career development have a positive and significant effect on job

satisfaction. It means that the better the compensation and career development, the

more job satisfaction increases. The consequence of compensation and career

development is certainly to increase job satisfaction.

3. Organizational commitment has a positive and significant effect on Job Satisfaction

of the Public Works Office of the Aceh Government. In other words, the higher the

job satisfaction, the higher the Job Satisfaction of the Public Works Office of the

Aceh Government. This finding suggests that organizational commitment is

something that must be considered by leaders to employees to increase employee

job satisfaction.

4. Organizational commitment can partially mediate the relationship between

compensation and work satisfaction. The implication for the Public Works Office

of Aceh Government who wants to improve job satisfaction can be achieved

through efforts to increase fair employee compensation under applicable regulations

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

in the Public Works Office of Aceh Government without having to be supported by

strengthening organizational commitment.

5. Organizational commitment can fully mediate the relationship between career

development and job satisfaction. The implication for the Office of Public Works

of the Government of Aceh who wants to improve Job Satisfaction can be achieved

by improving employee career development. This means that the Head of the Public

Works Office of the Aceh Government must focus attention on efforts that can

increase job satisfaction. Moreover, it will be stronger if strengthened by

organizational commitment

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